Can shares of a holding corporation qualify as “excluded shares”? CRA responded:
The definition of excluded shares should generally not include shares of a holding corporation. This is because, in the case of a holding corporation, all or substantially all of the income would be derived from a related business in respect of the individual (other than a business carried on by the holding corporation).
As a result, the shares of a holding corporation held by a specified individual will not be excluded shares of the individual and any income from, or a taxable capital gain from the disposition of, such shares, will not be an excluded amount and will be split income of the individual and subject to the TOSI unless another exclusion applies.
Depending on the circumstances, the income may not be split income if the income is from a related business that is an excluded business of the specified individual.